that our economy will remain strong. that we're creating jobs. >> reporter: the fiscal cliff is a combination of tax cuts that expire at the end of the year, and spending cuts that kick in on day one of next year. >> to show our seriousness, we have put revenue on the table. as long as it's a companied by significant spending cuts. >> reporter: the automatic spending cuts total $1.2 trillion in two years, half of the defense spending. >> without exception believe we're in the dilemma we're in because we tax too little but because we spend too much. >> reporter: on taxes, president obama wants rates increased on those making more than $250,000, while republicans have previously insisted that that is a non- starter. if there is no deal, income tax rates increase 3 to 5% across all tax brackets. if the payroll tax holiday ends, the social security tax rate goes back to 6.2%, an additional $1,000 for someone making about $50,000 a year. >> we're both going to have to give up some of the things that we know are a problem. >>